GFL(GFL) - 2025 Q2 - Quarterly Report

Unaudited Interim Condensed Consolidated Financial Statements GFL's H1 2025 financial statements reflect a significant net income turnaround due to divestitures, alongside reduced liabilities and increased equity Consolidated Statements of Operations and Comprehensive (Loss) Income GFL achieved a significant net income turnaround in H1 2025, primarily due to a major divestiture, with revenue from continuing operations growing by 7.4% Key Performance Indicators (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $3,235.3 M | $3,013.4 M | +7.4% | | Net Income (Loss) from Continuing Operations | $60.3 M | ($727.7 M) | Turnaround to Profit | | Net Income from Discontinued Operations | $3,620.8 M | $78.9 M | +4489.1% | | Net Income (Loss) Attributable to GFL | $3,685.9 M | ($644.0 M) | Turnaround to Profit | Earnings Per Share (Six Months Ended June 30) | EPS Type | 2025 | 2024 | | :--- | :--- | :--- | | Basic EPS (Continuing Operations) | $0.10 | ($2.05) | | Basic EPS (Discontinued Operations) | $9.57 | $0.21 | | Total Basic EPS | $9.67 | ($1.84) | Consolidated Statements of Financial Position Total assets decreased to $18.53 billion due to divestitures, while liabilities significantly reduced and shareholders' equity increased by June 30, 2025 Balance Sheet Summary | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $18,527.1 M | $21,207.4 M | | Total Liabilities | $10,639.6 M | $13,985.7 M | | Total Shareholders' Equity | $7,887.5 M | $7,221.7 M | Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased by $665.8 million in H1 2025, driven by net income and partially offset by significant share repurchases - Key equity movements in H1 2025 include a net income of $3,685.9 million, which significantly increased retained earnings[8] - The company executed a significant share buyback, repurchasing and cancelling 35,195,241 shares for a total cost of $2,460.5 million[8] - Dividends issued and paid during the six-month period totaled $15.9 million[8] Consolidated Statements of Cash Flows H1 2025 saw $479.6 million in operating cash flow, a $4.95 billion investing inflow from divestitures, and a $5.42 billion financing outflow for debt and share repurchases Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Operating Activities | $479.6 M | $627.8 M | | Investing Activities | $4,949.4 M | ($1,060.3 M) | | Financing Activities | ($5,418.1 M) | $436.6 M | - Investing activities were dominated by $5,820.5 million in proceeds from divestitures[11] - Financing activities included significant use of cash for repayment of long-term debt ($3,819.0 million) and repurchase of subordinate voting shares ($2,412.2 million)[11] Notes to the Consolidated Financial Statements This section provides detailed explanations of GFL's accounting policies, significant transactions, and financial instrument disclosures for the interim period Note 1: Reporting Entity GFL Environmental Inc. provides non-hazardous solid waste management services across North America, with shares traded on the NYSE and TSX - GFL provides non-hazardous solid waste management services through a network of facilities in Canada and the United States[14] - The company's subordinate voting shares are listed on the New York Stock Exchange and the Toronto Stock Exchange under the ticker 'GFL'[13] Note 2: Summary of Material Accounting Policies The financial statements follow IAS 34, with the Environmental Services divestiture classified as a discontinued operation, impacting comparative presentations - On March 1, 2025, GFL completed the divestiture of its Environmental Services line of business for an enterprise value of $8.0 billion[24] - Following the divestiture, GFL retained an approximate 44% non-controlling equity interest in GFL Environmental Services[24] - The divested business is now presented as a discontinued operation, and prior period comparative figures in the statements of operations have been re-presented for consistency[23][24] Note 3: Business Combinations and Investments GFL acquired 6 businesses for $277.8 million in H1 2025, significantly increasing investments in associates to $1.85 billion, including a call option for divested equity - Acquired 6 businesses for a total of $277.8 million in cash during the first six months of 2025[27][28] - As part of the divestiture, GFL holds a Call Option to repurchase the remaining equity of GFL Environmental Services, which is valued at $200.0 million and classified as a long-term asset[34][35] - The company maintains investments in renewable natural gas (RNG) projects through joint ventures, with a carrying value of $111.7 million as of June 30, 2025[37] Note 4: Property and Equipment Net property and equipment decreased to $6.83 billion by June 30, 2025, primarily due to $1.62 billion in disposals from the Environmental Services divestiture Property and Equipment, Net Carrying Amount | Date | Carrying Amount | | :--- | :--- | | December 31, 2024 | $7,851.7 M | | June 30, 2025 | $6,834.8 M | Note 5: Goodwill and Intangible Assets Goodwill decreased to $6.59 billion and net intangible assets to $1.63 billion, primarily due to disposals related to the divestiture Goodwill and Intangible Assets, Net Carrying Amount | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Goodwill | $6,589.1 M | $8,065.8 M | | Intangible Assets, Net | $1,634.6 M | $2,833.2 M | Note 6: Landfill Closure and Post-Closure Obligations Total landfill closure and post-closure obligations slightly increased to $1.07 billion by June 30, 2025, due to new provisions and accretion Landfill Closure and Post-Closure Obligations | Date | Obligation Amount | | :--- | :--- | | December 31, 2024 | $1,050.4 M | | June 30, 2025 | $1,070.5 M | Note 7: Long-Term Debt GFL significantly reduced long-term debt to $6.7 billion by June 30, 2025, utilizing divestiture proceeds for major debt repayments Total Long-Term Debt | Date | Amount | | :--- | :--- | | December 31, 2024 | $9,999.5 M | | June 30, 2025 | $6,695.7 M | - On March 4, 2025, the company repaid the entire outstanding principal on its Term Loan B Facility[53] - On March 14, 2025, GFL repaid the entire outstanding principal amounts of its 3.750% 2025 Secured Notes (US$750.0 million) and 5.125% 2026 Secured Notes (US$500.0 million)[49] Note 8: Interest and Other Finance Costs Interest and other finance costs slightly decreased to $331.5 million in H1 2025, including one-time costs for hedged arrangements and accelerated amortization Interest and Other Finance Costs (Six Months Ended June 30) | Component | 2025 | 2024 | | :--- | :--- | :--- | | Interest | $238.8 M | $278.6 M | | Termination of hedged arrangements | $30.5 M | $17.2 M | | Amortization of deferred financing costs | $26.9 M | $12.0 M | | Total | $331.5 M | $335.8 M | Note 9: Income (Loss) Per Share Total basic EPS significantly improved to $9.67 in H1 2025, primarily driven by a $9.57 contribution from discontinued operations Basic Earnings (Loss) Per Share (Six Months Ended June 30) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Continuing operations | $0.10 | ($2.05) | | Discontinued operations | $9.57 | $0.21 | | Total operations | $9.67 | ($1.84) | Note 10: Revenue Revenue from continuing operations grew to $3.24 billion in H1 2025, primarily driven by Commercial/Industrial, Landfill, Transfer, and Material Recovery services Revenue by Service Type (Six Months Ended June 30) | Service Type | 2025 | 2024 | | :--- | :--- | :--- | | Total collection | $2,211.5 M | $2,160.8 M | | Landfill | $569.5 M | $509.5 M | | Transfer | $455.1 M | $393.2 M | | Material recovery | $253.3 M | $203.1 M | | Total Revenue | $3,235.3 M | $3,013.4 M | Note 11: Operating Segments In H1 2025, the USA segment generated $2.18 billion in revenue and $754.0 million in Adjusted EBITDA, contributing to a total Adjusted EBITDA of $941.2 million for continuing operations Segment Performance (Six Months Ended June 30, 2025) | Segment | Revenue | Adjusted EBITDA | | :--- | :--- | :--- | | Canada | $1,050.7 M | $325.7 M | | USA | $2,184.6 M | $754.0 M | | Solid Waste Total | $3,235.3 M | $1,079.7 M | - Total Adjusted EBITDA from continuing operations for H1 2025 was $941.2 million, an increase from $823.8 million in H1 2024[65][66] Note 12: Shareholders' Capital GFL repurchased and cancelled 35,195,241 subordinate voting shares in H1 2025, including NCIB purchases, and converted 3,681,508 preferred shares - The company repurchased and cancelled a total of 35,195,241 subordinate voting shares in H1 2025[70] - Under its Normal Course Issuer Bid (NCIB), GFL repurchased 11,088,916 subordinate voting shares during the six months ended June 30, 2025[69] - On March 31, 2025, 3,681,508 Series A Preferred Shares were converted into 4,197,272 subordinate voting shares[71] Note 13: Supplemental Cash Flow Information Net change in non-cash working capital resulted in a $153.8 million cash outflow in H1 2025, mainly due to a decrease in accounts payable Changes in Non-Cash Working Capital (Six Months Ended June 30) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Accounts payable and accrued liabilities | ($167.8 M) | $53.9 M | | Trade and other receivables, net | ($1.2 M) | ($121.1 M) | | Prepaid expenses and other assets | $15.2 M | ($62.7 M) | | Total Change | ($153.8 M) | ($129.9 M) | Note 14: Financial Instruments and Risk Management The fair value of GFL's outstanding Notes was $5.86 billion as of June 30, 2025, with the Call Option classified as a Level 3 fair value instrument Fair Value of Debt Instruments (June 30, 2025) | Instrument | Carrying Value | Fair Value | | :--- | :--- | :--- | | Notes | $5,864.4 M | $5,860.1 M | | 4.375% Bonds | $286.5 M | $285.3 M | - The Call Option to repurchase GFL Environmental Services is measured at fair value and classified as a Level 3 instrument, using an option pricing model[80] Note 15: Commitments GFL had significant off-balance sheet commitments totaling $396.0 million in letters of credit and $1.76 billion in performance bonds as of June 30, 2025 - Outstanding letters of credit totaled approximately $396.0 million[83] - Issued performance bonds totaled $1,757.6 million[84] Note 16: Related Party Transactions GFL engaged in related party transactions in H1 2025, including a final payment on a CEO-controlled note and business with GFL Environmental Services - The note payable to an entity controlled by CEO Patrick Dovigi was fully paid off, with the balance reduced to $nil from $2.9 million[85] - GFL paid $33.5 million to satisfy tax obligations from the CEO's relocation to the U.S., an amount expected to be refunded[86] - Post-divestiture, GFL entered into transactions with GFL Environmental Services, resulting in revenue of $12.7 million and deferred revenue of $70.0 million in H1 2025[89] Note 17: Discontinued Operations The divestiture of GFL Environmental Services generated a net income of $3.62 billion from discontinued operations in H1 2025, including a $4.47 billion pre-tax gain Discontinued Operations Summary (Six Months Ended June 30, 2025) | Item | Amount | | :--- | :--- | | Net income (pre-disposal) | $27.3 M | | Gain on disposal (pre-tax) | $4,466.8 M | | Income tax on gain on disposal | ($873.3 M) | | Net income from discontinued operations | $3,620.8 M | - GFL received proceeds of $5,929.6 million, net of transaction costs, upon completion of the divestiture[91] Note 18: Subsequent Events New U.S. tax legislation, the 'One Big, Beautiful Bill Act', was enacted on July 4, 2025, with its impact on GFL's financials currently under evaluation - On July 4, 2025, the OBBB Act was signed into law, introducing changes to U.S. tax policy, including bonus depreciation and interest expense limitations[92] - The effects of these tax law changes are not incorporated in the financial statements for the period ended June 30, 2025, as the law was enacted after the balance sheet date[92]